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International Trade

Total U.S. exports for 2014 are $1.62 trillion. Automotive products represent 8.70% of that total, or more than $140 billion in 2014. Automakers and suppliers are America’s largest exporters, beating the next best performing manufacturing sector by more than $180 billion over the past 5 years. In 2014 alone, FCA US, Ford and General Motors exported nearly 1 million American-made vehicles to more than 100 different foreign markets.

Top Five U.S. Exporters (2014, in billions)

As America’s largest exporters, FCA US, Ford and General Motors have supported every U.S. free trade agreement ratified. These agreements have reduced tariffs and eliminated numerous non-tariff trade barriers in key markets. The Trans-Pacific Partnership (TPP) could generate similar benefits for U.S. exporters, but only if key issues are addressed:

  • Eliminate all auto non-tariff barriers in all TPP-member countries.
  • Include strong, enforceable currency manipulation disciplines (This is vital, due to Japan’s participation in the TPP).

Currency Manipulation by Japan undermines global competition in three ways:

  1. Makes it harder to export American vehicles to Japan;
  2. Provides Japanese automakers with an unfair competitive advantage in the United States; and,
  3. Makes it harder for American companies to compete with Japanese automobiles in other markets, like South America, China, Europe and the Middle East.

AAPC developed a proposal supported by leading non-partisan trade experts that is based on International Monetary Fund commitments already agreed to by all TPP member countries. It asks three simple questions to determine if a TPP member manipulates its currency:

  1. Did the TPP member have a current account surplus over the six-month period in question?
  2. Did it add to its foreign exchange reserves over that same six-month period?
  3. Are its foreign exchange reserves more than sufficient (i.e., greater than three months normal imports)?

If a TPP member is found to have breached its currency commitments under the agreement, the other TPP members shall be entitled to suspend the tariff benefits of the agreement with respect to the violating TPP member.

In an industry where automakers earn about $1,500 on a typical vehicle, Japan’s undervalued currency represents thousands of dollars per vehicle.

Weak Yen Subsidy Per Car in U.S.

Based on the October 1, 2012 rate of 78 yen/$, when Abenomics started.
3-4% profit margin on sedan. Source: McKinsey & Company, 2003 Preface to the Auto Sector Cases


Jan 10 2014
Written by Doug Palmer and Adam Behsudi | Posted on Politico Pro

Three senior lawmakers on Thursday unveiled long-awaited legislation to help President Barack Obama strike major trade deals in Asia and Europe, setting the stage for a potential election-year battle between the president and many of his fellow Democrats in Congress.

Jan 10 2014
Written by Elvina Nawaguna and Krista Hughes | Posted on Reuters

American automakers on Thursday pushed for rules against currency manipulation to be included in an ambitious trade pact being negotiated between the United States and 11 other Pacific Rim countries.

The American Automotive Policy Council, which represents Chrysler, Ford and General Motors, said participating nations should commit to not manipulating their exchange rates to gain an unfair competitive advantage.

Jan 10 2014
Written by David Shepardson | Posted on The Detroit News

A trade group representing Detroit's Big Three automakers on Thursday unveiled a proposal to prevent currency manipulation in a proposed free trade pact.

Jan 10 2014
Written by Brian Wingfield, Laura Litvan and Michael C. Bender | Posted on Bloomberg Politics

Congressional leaders who oversee trade policy introduced legislation today that would give President Barack Obama the fast-track authority he is seeking to enact three of the world’s largest accords.

House Ways and Means Committee Chairman Dave Camp of Michigan joined leaders of the Senate Finance Committee to offer legislation on so-called trade-promotion authority, which subjects trade deals to an up-or-down vote by Congress.

Jan 09 2014

AAPC Announces Proposal for Strong, Enforceable Currency Provisions in the Trans-Pacific Partnership